Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2018

Summary of Significant Accounting Policies


Three Months Ended September 30,	2018
	(in thousands)
Lodging	$	10,490
Food and beverage		30,567
Other		1,687
Total amount recorded in food, beverage, hotel and other revenues and offset to gaming revenues	$	42,744


Nine Months Ended September 30,	2018
	(in thousands)
Lodging	$	30,793
Food and beverage		77,317
Other		3,697
Total amount recorded in food, beverage, hotel and other revenues and offset to gaming revenues	$	111,807

Schedule of estimated cost of providing complimentary services



Three Months Ended September 30,	2018
	(in thousands)
Lodging	$	1,481
Food and beverage		11,509
Other		574
Total cost of complimentary services included in food, beverage, hotel and other expense	$	13,564


Nine Months Ended September 30,	2018
	(in thousands)
Lodging	$	4,302
Food and beverage		28,969
Other		1,151
Total cost of complimentary services included in food, beverage, hotel and other expense	$	34,422

Schedule of disaggregation of revenue

Our revenue disaggregation by type of revenue and geographic location is as follows (in thousands):


Three Months Ended September 30, 2018	Northeast		South/West		Midwest		Other		Total

Gaming	$	356,787	$	93,580	$	195,968	$	-	$	646,335
Food and beverage		21,669		30,572		17,080		230		69,551
Lodging		2,684		23,279		9,004		-		34,967
Racing		3,842		122		-		1,451		5,415
Reimbursable management costs		3,910		-		-		-		3,910
Other		9,926		5,435		5,855		8,257		29,473
Total net revenues	$	398,818	$	152,988	$	227,907	$	9,938	$	789,651


Nine Months Ended September 30, 2018	Northeast		South/West		Midwest		Other		Total

Gaming	$	1,076,709	$	290,890	$	598,324	$	-	$	1,965,923
Food and beverage		60,419		88,475		48,225		812		197,931
Lodging		6,950		70,899		25,921		-		103,770
Racing		14,009		228		-		4,638		18,875
Reimbursable management costs		46,822		10,459		-		-		57,281
Other		31,064		16,702		15,982		25,121		88,869
Total net revenues	$	1,235,973	$	477,653	$	688,452	$	30,571	$	2,432,649

Schedule of reconciliation of the weighted-average common shares outstanding used in the calculation of basic EPS to the weighted-average common shares outstanding used in the calculation of diluted EPS


	Three Months Ended September 30,	Three Months Ended September 30,	Nine Months Ended September 30,	Nine Months Ended September 30,
	2018	2017	2018	2017
	(in thousands)		(in thousands)
Determination of shares:
Weighted-average common shares outstanding	91,948	90,913	91,538	90,865
Assumed conversion of dilutive employee stock-based awards	3,163	2,582	3,264	1,957
Assumed conversion of restricted stock	223	94	213	81
Diluted weighted-average common shares outstanding	95,334	93,589	95,015	92,903

Schedule of calculation of basic and diluted EPS for the entity's common stock

The following table presents the calculation of basic and diluted EPS for the Company’s common stock for the three and nine months ended September 30, 2018 and 2017 (in thousands, except per share data):


	Three Months Ended September 30,		Three Months Ended September 30,		Nine Months Ended September 30,		Nine Months Ended September 30,
	2018		2017		2018		2017
Calculation of basic EPS:
Net income applicable to common stock	$	36,125	$	789,340	$	135,550	$	811,523
Weighted-average common shares outstanding		91,948		90,913		91,538		90,865
Basic EPS	$	0.39	$	8.68	$	1.48	$	8.93

Calculation of diluted EPS using two-class method:
Net income applicable to common stock	$	36,125	$	789,340	$	135,550	$	811,523
Diluted weighted-average common shares outstanding		95,334		93,589		95,015		92,903
Diluted EPS	$	0.38	$	8.43	$	1.43	$	8.74

Weighted-average assumptions used in Black-Scholes option pricing model


Nine months ended September 30,	2018		2017
Risk-free interest rate	2.26	%	1.97	%
Expected volatility	30.80	%	30.67	%
Dividend yield	—		—
Weighted-average expected life (years)	5.30		5.30

Schedule of information with respect to the Company's segments

The following tables (in thousands) present certain information with respect to the Company’s segments. Intersegment revenues between the Company’s segments were not material in any of the periods presented below.


		Three months ended				Nine months ended
		September 30,				September 30,
		2018		2017		2018		2017

Net Revenues
Northeast	$	398,818	$	401,818	$	1,235,973	$	1,200,382
South/West		152,988		160,153		477,653		453,123
Midwest		227,907		232,051		688,452		685,236
Other (1)		9,938		12,225		30,571		40,193
Total Reportable Segment Net Revenues		789,651		806,247		2,432,649		2,378,934


Adjusted EBITDA
Northeast		128,910		127,644		397,844		384,094
South/West		38,910		35,046		130,608		106,436
Midwest		77,760		76,044		237,923		229,640
Other (1)		(15,881)		(13,516)		(47,024)		(40,103)
Total Reportable Segment Adjusted EBITDA		229,699		225,218		719,351		680,067

Other operating costs and other expenses (income)
Depreciation and amortization		56,852		66,483		175,801		205,688
Unconsolidated non-operating costs - Kansas JV		1,271		1,310		3,844		4,570
Interest expense		114,844		118,236		346,457		350,000
Interest income		(246)		(304)		(736)		(3,185)
Loss on disposal of assets		3,220		96		3,223		103
Provision (recovery) for loan loss and unfunded loan commitments to the JIVDC and impairment losses		—		24,317		(16,367)		29,952
Insurance recoveries		—		—		(68)		—
Cash-settled stock award variance		(1,692)		1,583		(1,354)		12,839
Pre-opening and significant transaction costs		5,187		1,848		17,159		4,593
Loss on early extinguishment of debt and modification costs		311		—		3,772		23,390
Other		1,435		236		1,479		2,202
Contingent purchase price		407		(20,716)		1,743		(16,794)
Charge for stock compensation		2,915		1,853		8,847		5,827
Income before income taxes		45,195		30,276		175,551		60,882
Income taxes		9,070		(759,064)		40,001		(750,641)
Net income	$	36,125	$	789,340	$	135,550	$	811,523


		Northeast		South/West		Midwest		Other (1)		Total

Three months ended September 30, 2018
Capital expenditures	$	9,921	$	4,616	$	8,493	$	973	$	24,003

Three months ended September 30, 2017
Capital expenditures	$	5,621	$	12,681	$	7,935	$	1,045	$	27,282

Nine months ended September 30, 2018
Capital expenditures	$	21,397	$	13,352	$	17,869	$	4,343	$	56,961

Nine months ended September 30, 2017
Capital expenditures	$	15,144	$	33,227	$	19,611	$	2,260	$	70,242

Balance sheet at September 30, 2018
Total assets (1)	$	809,208	$	763,654	$	1,072,406	$	2,438,574	$	5,083,842
Investment in and advances to unconsolidated affiliates		105		—		84,891		39,657		124,653
Goodwill		21,242		244,695		674,558		68,396		1,008,891
Other intangible assets, net		360,643		690		98,998		12,637		472,968

Balance sheet at December 31, 2017
Total assets (1)	$	821,649	$	794,274	$	1,070,204	$	2,548,685	$	5,234,812
Investment in and advances to unconsolidated affiliates		102		—		88,296		60,514		148,912
Goodwill		21,242		244,695		674,558		67,602		1,008,097
Other intangible assets, net		303,043		1,623		101,698		16,242		422,606

(1) Other also includes corporate overhead operations as well as Penn Interactive Ventures, which is a wholly-owned subsidiary that is focused on the Company’s interactive gaming strategy. Total assets include the real property assets under the Master Lease with GLPI. Net revenues and adjusted EBITDA relate to the Company’s stand-alone racing operations, namely Sanford Orlando Kennel Club and the Company’s joint venture interests in Texas and New Jersey which do not have gaming operations.